Andre Lehman for The Sydney Morning Tribune reports that the cell phone have allowed many industries and sectors to thrive as a result of access to mobile technologies.

Research has found that every 10% growth in mobile phone penetration brings about an increase of 0.6% in economic growth, according to a World Bank analyst. You can read more about the impact that growing economies have on the telecommunications sector here.

Thanks to mobile telephones and instant messaging, fishermen, farmers, handicraft workers have been able to sell in a more efficient way or even find new clients, and can afford to stay in business even if they can not open up a shop.

The number of mobile telephone users is expected to reach 4.6 billion this year, a more than four-fold increase from one billion in 2003, says one United Nations Telecommunications Union statistic.

• iShares S&P Global Telecommunications Sector Index Fund (NYSEArca: IXP): up 7.5% year-to-date



• WisdomTree International Communications Fund (NYSEArca: DGG): up 9.6% year-to-date

For more stories about telecom, visit our telecom category.

China Unicom, the China’s second-largest carrier with 140 million subscribers, announced a three-year agreement to sell Apple’s (APPL) iPhone, which could make China’s markets account for 15% to 20% of global iPhone sales next year, writes Gregg Keizzer for ComputerWorld. Apple will face competition in China from other smartphone name brands such as Google’s (GOOG) Android operation system and BlackBerry devices from Research in Motion (RIMM).

The launch of the iPhone is slated for the fourth quarter of this year, but it is still unclear as to what model of the iPhone China Unicom will be offering, according to ComputerWorld. The device also does not list Wi-Fi as a feature, since China did not approve the use of Wi-Fi mobile phones until this year.

Right after China Unicom’s announcement with Apple, China Mobile exhibited its “Ophones” from Dell (DELL), HTC, and Lenovo, reports Martin Perez for InformationWeek. China Mobile, the largest carrier in China, has around 500 million subscribers.

The Ophones will have carrier-specific applications that deliver news, e-mail and other services and the increase sales of smartphones are expected to ease the transition of China’s adoption of a Mobile 3G service.

• WisdomTree International Communications (DGG): up 2.4% year-to-date; China Mobile Ltd. is 5.7%, China Unicom is 4.1%

• iShares S&P Global Telecommunications (IXP): up 3.5% year-to-date; China Mobile Ltd. is 4.9%

For more information on telecoms, visit our telecommunications category.

Max Chen contributed to this article.

Verizon Communications (VZ) has announced it will merge with Frontier Communications for $5.3 billion in stock, according to The New York Times. The deal will include 4.8 million access lines covering 14 states. It is the beginning of Verizon’s plan to tap into the wireless, FiOS fiber-optic services and other broadband development.

Cisco Systems Inc (CSCO) has won the contract to expand the high-speed wireless networks of Clearwire Corp. (CLWR) and it will create new devices for the carrier, report Kelly Riddell and Ville Heiskanen for Bloomberg. The devices will be for consumers and small/medium-sized companies, and future technologies will be implemented to boost internet traffic.

The second largest phone company in Europe Telefonica SA (TEF) reported a 9.8% increase in first quarter profits after adding emerging market customers, writes Paul Tobin for Bloomberg. Customers in Latin America are expected to generate growth for the company as operations in Europe are on the decline.

• WisdomTree International Communications (DGG): down 13.4% year-to-date; TEF is 5.9%

• iShares Dow Jones U.S. Telecom (IYZ): up 7% year-to-date; VZ is 14.8%

Max Chen contributed to this article.

Once thought to be immune from the economic disaster, the steady cash flows and steady demand are not as resilient as once believed. Molly Neal for The Wall Street Journal reports that many European operators are reporting falling profits, with much more of the same anticipated in the future.

Premium mobile services are no longer affordable, and have since become a luxury in markets such as Spain, France, the United Kingdom and Germany. Blame the recession for putting a damper on the growth of this sector over there.

Meanwhile, telecom companies in Malaysia and the Philippines have shown growth. TMC net.com press release also reports that coming into 2008 just over 90% of the 27 million people in Malaysia had a mobile telephone service. Evidently Malaysia and the Philippines has developed one of the more advanced telecom environments in the developing world.

Is their growth enough to restore the sector at large?

In the United States, telecommunications companies could benefit from the economic stimulus package. And despite a global recession, AT&T (T) has announced that it would spend $1 billion in expanding its global network, which would add greater capacity for businesses in the United States and overseas.

• WisdomTree International Communications (DGG): down 16.9% year-to-date

When compiling a list of investments to potentially purchase, Gary Gordon for ETF Expert says he is considering the following: downside risk, cash flows and technical strength. In general, the lower the downside risk, the higher the relative safety; the higher the cash flows through reliable dividends, the easier it is to project future financial statements; the potential investment should climb above its trendline.

When using this criteria, the telecom industry appears to be appealing, Gordon says.  To take it a step further, in the this industry, the telecom ETFs that have international exposure tend to perform better and generate a lift in dividend yield then the ones that don’t.  Lastly, these types of indexes performed much better than the broader benchmarks, like the S&P 500 SPDR Trust (SPY), which is down 38% year-to-date and down 28.2% over the past three months.

President-elect Barack Obama could give the industry another lift, too, as he has stressed what a shame he thinks it is that the United States ranks a paltry 15th in broadband access, behind countries such as Iceland, Finland, Canada and Korea. If some of his infrastructure investment money goes to this area, the sector’s ETFs could benefit.

iShares S&P Global Telecom (IXP): down 34.2% year-to-date and down 12.7% in the last three months.

WisdomTree International Communications (DGG): down 34.9% year-to-date and down 11.7% over the last three months

Both ETFs have broken their 50-day moving averages, but are still working their way toward the 200-day moving average, a strategy that we use to determine when to be in or out of an ETF.

This brings the Spider line to include 80 ETFs, with 31 of those focused on global access to international markets. The new offerings enter a market space that WisdomTree had been cornering.

Why would you choose one or the other? As Gary Gordon for ETF Expert says: it’s a matter of preference. State Street’s funds have a traditional market-cap weighted methodology. WisdomTree’s funds have a dividend-weighted index methodology. Dividends in the WisdomTree funds will come annually, while State Street’s will be quarterly.

The expense ratio for the State Street funds is set at 0.5%, while the WisdomTree funds come in at 0.58%.

The 10 new ETFs are are international sector SPDRs and they give access to investments outside the U.S. benchmarked to a series of S&P World ex-US Broad Market Indices. The following ETFs are market-cap weighted, include only non-U.S. holdings, and use the Global Industry Classification Standard, or GICS.

The ETFs are:

• SPDR S&P International Consumer Discretionary Sector (IPD)
• SPDR S&P International Consumer Staples (IPS)
• SPDR S&P International Financial Sector (IPF)
• SPDR S&P International Health Care Sector (IRY)
• SPDR S&P International Industrial Sector (IPN)
• SPDR S&P International Materials Sector (IRV)
• SPDR S&P International Technology Sector (IPK)
• SPDR S&P International Telecommunications Sector (IST)
• SPDR S&P International Utilities Sector (IPU)
• SPDR S&P International Energy Sector (IPW)

WisdomTree’s funds launched Oct. 13, 2006 and they are:

• WisdomTree International Basic Materials Sector (DBN)
• WisdomTree International Communications Sector (DGG)
• WisdomTree International Consumer Discretionary Sector (DPC)
• WisdomTree International Consumer Staples Sector (DPN)
• WisdomTree International Energy Sector (DKA)
• WisdomTree International Financial Sector (DRF)
• WisdomTree International Health Care Sector (DBR)
• WisdomTree International Industrial Sector (DDI)
• WisdomTree International Technology Sector (DBT)
• WisdomTree International Utilities Sector (DBU)